Now serving more than 80,000 Sunflower account holders, China Merchants already has one of the most prosperous customer profiles among the domestic banks. The bank plans to offer a full range of private-banking services to high-end clients with assets of at least 5 million yuan that can be invested.

Incomparable scale

Seeing an opening to serve customers that foreign competitors cannot yet reach, some of China's largest banks are exploiting their incomparable scale. With some 18,000 branches, for example, the Industrial and Commercial Bank of China (ICBC) recently announced plans that will make it a distribution juggernaut.

Already China's biggest lender, the ICBC will open 3,000 VIP wealth management offices staffed by personal financial advisors. Originally serving as an outlet for other firms' insurance and investment products, the bank is taking advantage of a regulatory change that enables it to add its own proprietary funds to the mix.

In June, the ICBC raised $585 million from individual investors to capitalize two new funds to invest in domestic and international equities in portfolios that will be managed by UK-based JPMorgan Fleming Asset Management.

With the bellwether Shanghai stock index up more than 400 percent since early 2005, conditions look favorable for the expansion of China's emerging "investor class" and the proliferation of companies that aspire to serve them profitably. The industry's real challenge will come when the markets tumble or the economy falters. When that inevitable correction occurs, the firms best positioned to thrive will have earned investors' trust by educating them, offering them products that are transparent and liquid, and supporting them with service that is personal and responsive to their needs.

Nick Palmer and Johnson Chng are partners with Bain &Coy, based in Hong Kong and Shanghai, respectively. Both are affiliated with the firm's Asian Financial Services practice.